Exhibit
        10.1


      PROMISSORY
        NOTE


      

        
          	
                  $5,000,000.00

                	
                  June
                    30, 2008

                


        



      FOR
        VALUE
        RECEIVED, on
        the
        Maturity Date, as such term is defined in Section 1.1 below,
        BEACON POWER CORPORATION,
        a
        Delaware corporation with its chief executive office and principal place
        of
        business presently at 65
        Middlesex Road, Tyngsboro, MA 01879
        ("Borrower")
        promises to pay to the order of MASSACHUSETTS
        DEVELOPMENT FINANCE AGENCY, a
        body
        politic and corporate created by Chapter 289 of The Acts of 1998 and established
        under Massachusetts General Laws Chapter 23G as amended, ("Lender")
        at its
        principal offices at 160 Federal Street, Boston, MA 02110, or at such other
        place as the holder of this note may from time to time designate in writing,
        the
        principal sum of FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00), or such
        lesser
        amount advanced by Lender pursuant to Section 1.1 below (the “Loan”),
        or so
        much thereof then remaining unpaid, in lawful money of the United States
        with
        interest at the rate or rates set forth below, until fully paid. Borrower
        further agrees to pay upon an Event of Default, as such term is defined below,
        all costs, including reasonable attorneys’ fees reasonably incurred in the
        collection of Borrower’s obligations and the defense, preservation, enforcement
        or protection of Lender’s rights and remedies under this Note, or in the
        foreclosure of any mortgage or security interest now or hereafter securing
        the
        same or in any proceedings to otherwise enforce or protect upon an Event
        of
        Default Lender’s rights and remedies under this Note or any security therefor.
        Interest on this Note shall be computed on the basis of a year of three hundred
        sixty (360) days and actual days elapsed. 

      


      1.0. Funding;
        Term; Interest Rate; Payments.

      


      1.1. Funding;
        Term.
        

      


      (a) Borrower
        may request one (1) or more advances of up to the entire principal amount
        of
        this Note for the purchase of equipment and installation of certain tenant
        improvements more specifically defined in a certain Collateral Assignment
        of
        Lease Agreement of even date herewith, at the Borrower’s manufacturing
        facility at 65 Middlesex Road, Tyngsboro, Massachusetts
        (the
“Premises”).
        

      


      (b) Provided
        no Event of Default has occurred and is continuing on the date of each request
        for an advance, and no event or circumstance exists on such date, which with
        the
        passage time, or notice, or both would result in an Event of Default, Lender
        shall advance the full requested amount within ten (10) business days of
        the
        date of such request. Borrower may request one (1) or more advances, subject
        to
        availability of funds hereunder as a result of advances made pursuant to
        Section
        1.1(a) above, and the limitation on the total aggregate advances made pursuant
        to this Section 1.1(b) set forth below, for the purposes of performing tenant
        improvements to the Premises (the “Tenant
        Improvements”),
        as
        more fully described on Schedule A attached to that certain Security Agreement
        of even or near date herewith (the
        “Security
        Agreement”),
        and
        purchasing new equipment (the “Equipment”),
        also
        as more fully described on Schedule A to the Security Agreement, to be operated
        and maintained at the Premises, provided
        that,
        prior
        to
        the first advance of the Loan under this Section 1.1(b), in
        the
        case of Equipment, (i)
        Borrower’s
        request
        for the advance is accompanied by Borrower’s invoices evidencing the purchase of
        the Equipment for which the advance is sought and evidence of delivery of
        the
        same to the Premises, and (ii) such advance does not exceed eighty-five percent
        (85%) of the invoice cost of the Equipment purchased with the funds advanced
        hereunder; and in the case of Tenant Improvements, Borrower’s
        request
        for the advance is accompanied by
        (x)
        architect’s and contractor’s contracts in a form reasonably satisfactory to
        Lender, (y) plans and specifications for the Borrower’s tenant improvements to
        the Premises, and (z) a budget for such improvements. Prior to the final
        advance
        for the Tenant Improvements, Borrower shall provide an unconditional certificate
        of occupancy for the Premises permitting the use thereof for Borrower’s intended
        purpose, and such other items as would customarily be required by a conventional
        institutional construction lender.

       


      
        
           

        

        
           

          
            

          

        

        
           

        

      


      (c)
         The
        term
        of this Note shall commence on June 30, 2008 (the “Effective
        Date”)
        and
        shall mature on the same date of the 84th
        calendar
        month following the Initial
        Funding Date (as defined below) (the “Maturity Date”). Borrower’s obligation to
        make payments of principal and interest under Section 1.2 commence when Lender
        first advances funds to Borrower in accordance with Section 1.1 (the “Initial
        Funding
        Date”).

      


      1.2. Payments
        of Principal and Interest.
        Payments
        of interest only during the first twelve (12) months after the Effective
        Date,
        at the rate provided in Section 1.3 below, shall be due and payable and shall
        commence on the first (1st)
        day of
        the calendar month next following the Initial
        Funding
        Date
        (the “Payment
        Start Date”).
        Each
        such payment of accrued interest shall be paid in arrears. Thereafter,
        the then balance of the principal outstanding under this Note shall be amortized
        such that monthly payments of principal and interest (at the rate provided
        in
        Section 1.3 below) shall commence on the first anniversary of the Payment
        Start
        Date and shall continue on the first day of each successive month thereafter
        in
        as equal monthly installments as possible over the remaining term of this
        Note.
        No further advances of principal shall be made hereunder after the first
        anniversary of the Payment Start Date.

      


      1.3. Interest
        Rate.
        So long
        as no Event of Default has occurred and is continuing (but subject to applicable
        cure or grace periods), and subject to the terms hereof, the principal
        outstanding hereunder from time to time shall bear interest at a fixed annual
        rate of six and one-half (6.50%) percent.

      


      2.0. Default
        Rate.
        To the
        extent allowed by applicable law, after the occurrence of any Event of Default
        and during the continuation thereof (and after giving effect to any applicable
        grace or cure periods), after the Maturity Date, or after judgment has been
        rendered on this Note, all outstanding principal and unpaid interest shall
        bear,
        until paid, interest at a
        rate
        per annum equal to five (5%) percentage
        points greater than that which would otherwise be applicable assessed
        retroactive to the date that the Event of Default first occurs (the
“Default
        Rate”).

      


      3.0. Late
        Charge.
        If a
        regularly scheduled payment is five (5) business days or more late, Borrower
        will be charged five percent (5%) of the unpaid portion of the regularly
        scheduled payment or ten dollars ($10.00), whichever is greater. If Lender
        demands payment in writing of this Loan after the occurrence and during the
        continuation of an Event of Default (after giving effect to any applicable
        grace
        or cure periods), and Borrower does not pay the Loan within fifteen (15)
        days
        after Lender’s demand, Borrower will be charged five percent (5%) of the unpaid
        principal amount plus accrued and unpaid interest.

      


      4.0. Expenses.
        Borrower further promises to pay to Lender, as incurred, and as an additional
        part of the unpaid principal, all costs, expenses and reasonable attorneys'
        fees
        incurred
        (except
        such as shall result from Lender’s gross negligence or willful
        misconduct):
        (a) in
        the protection, modification, collection, defense or enforcement of all or
        part
        of this Note or any guaranty hereof; or (b) in the foreclosure or enforcement
        of
        any mortgage or security interest which may now or hereafter secure the debt
        hereunder, or (c) with respect to any action reasonably taken to protect,
        defend, modify or sustain the lien of any such mortgage or security agreement;
        or (d) with respect to any litigation or controversy arising from or connected
        with this Note or any mortgage or security agreement or collateral which
        may now
        or hereafter secure this Note; or (e) with respect to any act during the
        continuance of an Event of Default to protect defend, modify, enforce or
        release
        any of its rights or remedies with regard to, or otherwise effect collection
        of,
        any collateral which may now or in the future secure this Note or with regard
        to
        or against Borrower or any endorser, guarantor or surety of this Note. Borrower
        also promises to pay Lender, on the date hereof, all reasonable third party
        costs incurred in making this loan to Borrower including without limitation
        Lender’s legal fees and costs,
        and
        filing
        fees.

       

      
        
           

        

        
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      5.0. Optional
        Prepayment.
        Borrower may at any time elect to prepay the unpaid amount of this Note,
        or any
        part thereof, without penalty or premium; provided, however, that, any such
        prepayment shall first be applied to (i) any unpaid expenses required by
        Section
        4.0 above, then to (ii) late fees, if any are due, then to (iii) Default
        Rate
        interest, if any is due, then to (iv) regularly accrued but unpaid interest
        pursuant to Section 1.3 above, and then finally to (v) the
        principal.

      


      6.0 Warrants.
        As
        part
        of the consideration in making the Loan on favorable terms and conditions,
        Borrower shall issue to the Lender on the date of this Note  two
        (2)
        separate
        warrants with identical terms entitling Lender to purchase an aggregate of
        171,958 shares (85,979 shares per warrant) of voting common stock
        in the Borrower
        with an
        exercise price of $1.89 per share, subject to any adjustments as set forth
        in
        Section 8 of each warrant (the “Warrants”).
        The
        above
        description of the Warrants does not purport to be complete and is qualified
        in
        its entirety by reference to the full text of the Warrants, a copy of which
        has
        been provided to the Lender and is incorporated herein by
        reference.

      


      7.0. Default.
        The
        happening of any of the following events or conditions shall constitute an
        “Event
        of Default”
under
        this Note:

      


      7.1. Failure
        to make any payment of principal or interest on any sum due under this Note
        within ten
        (10)
        days
        after the same shall be due and payable. 

      


      7.2. Failure
        by Borrower to observe or perform any covenant contained herein or a default
        or
        the occurrence of an event of default in any agreement between Borrower and
        Lender in connection herewith, including the Security Agreement and that
        certain
        Collateral Assignment of Lease Agreement (the “Collateral
        Assignment”)
        by and
        between Borrower and Lender of even date herewith beyond the applicable grace
        or
        cure period (or, if no such grace or cure period is specified, then beyond
        thirty (30) days following written notice by Lender to Borrower of the
        occurrence of any such default or event of default).

      


      7.3. A
        material default by Borrower under that certain Lease Agreement by and between
        Borrower and GFI
        Tyngsboro, LLC ("Landlord")
        dated
        July 23, 2007,
        including all addenda and riders thereto (the “Lease”),
        such
        default continuing beyond the applicable cure or grace period. A “material”
default as provided in this Section 7.3 shall mean any default of any covenant,
        term or condition of the Lease, the failure by Borrower to cure which default
        gives Landlord the right to terminate the Lease in accordance with the terms
        and
        conditions thereof.

      


      7.4. The
        term
        of the Lease ends, for any reason other than what is permitted Borrower under
        the Lease, prior to the Maturity Date.

      


      7.5. Any
        amendment to the Lease without the Lender’s prior written consent (not to be
        unreasonably withheld,
        conditioned or delayed)
        which
        has the effect of
        (i)
terminating
        the Lease before the Maturity Date,
        (ii)
defining
        Premises
        as set forth in the Lease
        in a
        manner materially adverse to the collateral securing this Note, (iii)
        increasing
        the
        rent due, (iv) making
        the
        rent
        payment terms
        less
        favorable to the Borrower,
        (v)
materially
        increasing any
        repair obligation (vi) imposing
        any
        escalators as additional rent or (vii) amending any other financial provision
        of
        the Lease
        in a
        manner materially adverse to the Borrower,
        

      


      7.6. As
        of the
        Effective Date, any
        representation or warranty made by Borrower herein or in any agreement executed
        in connection herewith, including the Security Agreement or any statement,
        certificate or other data furnished by Borrower in connection herewith or
        with
        such agreements, proves
        to have
        been incorrect in any material respect when made.

       

      
        
           

        

        
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      7.7. A
        judgment or judgments for the payment of money shall be rendered against
        Borrower in an amount, individually or in the aggregate, of at least two
        hundred
        thousand dollars ($200,000.00), and any such judgment shall remain unbonded
        or
        unsatisfied and in effect for any period of thirty (30) consecutive days
        without
        a stay of execution, and the Lender holds the good faith belief that such
        unsatisfied judgment or unstayed execution is materially adverse to the
        condition (financial or otherwise) of the Borrower or the Lender’s collateral
        for this Note. 

      


      7.8. Borrower
        shall: (a) apply for or consent to the appointment of a receiver, trustee
        or
        liquidator of all or a substantial part of any of its assets; (b) admit in
        writing its inability to pay its debts as they mature; (c) file or permit
        the
        filing of any petition, case arrangement, reorganization, or the like under
        any
        insolvency or bankruptcy law, or be adjudicated as a bankrupt, or make an
        assignment for the benefit of creditors or consent to any form or arrangement
        for the satisfaction, settlement or delay of debt or the appointment of a
        receiver for all or any part of its properties; or (d) any action shall be
        taken
        by Borrower for the purpose of effecting any of the foregoing.

      


      7.9. An
        order,
        judgment or decree shall be entered, or a case shall be commenced, against
        Borrower, without its application, approval or consent by any court of competent
        jurisdiction, approving a petition or permitting the commencement of a case
        seeking reorganization or liquidation of Borrower or appointing a receiver,
        trustee or liquidator of Borrower, or of all or a substantial part of the
        assets
        of Borrower, and Borrower, by any act, indicates its approval thereof, consent
        thereto, or acquiescence therein, or such order, judgment, decree or case
        shall
        continue unstayed and in effect for any period of sixty (60) consecutive
        days,
        or an order for relief in connection therewith shall be entered.

      


      7.10. If
        Borrower shall dissolve or liquidate, or be dissolved or liquidated, or cease
        to
        legally exist, or merge or consolidate, or be merged or consolidated with
        or
        into any other corporation or entity,
        other
        than (i) a merger or reorganization involving only a change in the state
        of
        incorporation of the Borrower or (ii)
        the
        acquisition by the Borrower of another business where the Borrower survives
        as a
        going concern (in the case of an event
        listed
        in (i) and (ii) above,
        Borrower must provide Lender with written notice of such event within less
        than
        ten (10) business days prior to the effective date thereof).

      


      7.11. If
        any
        other indebtedness or obligation shall be accelerated, or if there exists
        any
        event of default under any instrument, document or agreement governing,
        evidencing or securing such other indebtedness or obligation, in any event,
        in
        an amount, individually or in the aggregate, of at least two hundred thousand
        dollars ($200,000.00);
        and any such amount remains unpaid or any such indebtedness or obligations
        remain accelerated or any such event of default remains uncured, in each
        case,
        for any period of thirty (30) consecutive days; and the Lender holds the
        good
        faith belief that such unpaid indebtedness or event of default is materially
        adverse to the condition (financial or otherwise) of the Borrower or the
        Lender’s collateral for this Note.

       

      7.12. If
        Borrower relocates any material portion of its manufacturing operations,
        or any
        other Massachusetts-based operations financed with any portion of the Loan
        proceeds, from the Premises to another site outside the Commonwealth of
        Massachusetts, or for any reason ceases such manufacturing or other financed
        operations at the Premises for any reason other than (i) a default by Landlord
        under the Lease for a thirty (30) day period (consecutive or cumulative in
        any
        ninety (90) day period), or (ii) force majeure which prevents such manufacturing
        or other financed operations at the Premises for a continuous six (6) month
        period.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

      


      7.13. If
        Borrower fails to maintain at all times during the term a minimum cash balance
        of $1,500,000.00 in the Borrower’s principal bank depository.

       

      7.14. If
        by
        December 31, 2008, the Borrower fails to file or cause to be filed with the
        Securities and Exchange Commission a Registration Statement providing for
        the
        resale of all shares received upon exercise of the Warrants then outstanding
        for
        an offering to be made by the Lender, or its permitted assignee, the
        Massachusetts Technology Park Collaborative (“MTPC”),
        and
        fails
        thereafter to use commercially reasonable efforts to both have such registration
        statement declared effective as soon thereafter as reasonably practicable
        and to
        maintain the effectiveness of such registration statement after it is declared
        effective
        until
        the earlier date of when: (i) all shares received upon exercise of the Warrants
        have been sold or (ii) all shares received upon exercise of the Warrants
        are
        covered by such registration statement may be sold immediately without
        registration under the Securities Act and without volume restrictions pursuant
        to Rule 144, as determined by the counsel to the Borrower pursuant to a
        written opinion letter to such effect, addressed and acceptable to the
        Borrower’s transfer agent and the affected warrant holder.

       

      Upon
        and
        after an Event of Default, the entire unpaid balance of said indebtedness,
        both
        principal and interest, and including any other sums which may become due
        under
        this Note, shall, upon written notice from the holder and at the holder’s
        option, immediately become due and payable without presentment, further demand,
        protest, notice of protest, or other notice of dishonor of any kind, all
        of
        which are hereby expressly waived by Borrower; in addition, Lender shall
        have
        those remedies available to it under Section 8 of the Security Agreement.
        Notice
        of an Event of Default shall be provided in accordance with Section 8(a)
        of the
        Security Agreement.

       

      8.0. Maximum
        Permissible Interest Rate.
        Borrower shall not be obligated to pay and Lender shall not collect interest
        at
        a rate higher than the maximum permitted by law or the maximum that will
        not
        subject Lender to any civil or criminal penalties. If, because of the
        acceleration of maturity, the payment of interest in advance or any other
        reason, Borrower is required, under the provisions hereof, pursuant to the
        provisions of any other agreements, instruments, documents, security agreements,
        mortgages, financing statements, and supplements thereto and relating to
        the
        Loan, or entered into between Borrower in favor of, or with, Lender, at any
        time, for any purpose (the “Loan
        Documents”)
        or
        otherwise, to pay interest at a rate in excess of such maximum rate, the
        rate of
        interest under such provisions shall immediately and automatically be reduced
        to
        such maximum rate and any payment made in excess of such maximum rate shall
        be
        applied to principal outstanding hereunder or, if received by applicable
        law,
        shall be returned to Borrower.

       

      9.0. Source
        of Loan; Limited Recourse.
        Borrower hereby acknowledges that the Loan is being made by Lender from the
        Commonwealth of Massachusetts’s Emerging Technology Fund created pursuant to
        Section 27 of Chapter 23G of Massachusetts General Laws (the “Fund”) which is
        administered by Lender. In consideration of the Lender’s agreement to make the
        Loan, to the extent that the Borrower ever has any off-sets, defenses or
        claims
        against the Lender, its subsidiaries, affiliates, any members of the Fund’s
        advisory committee, parents, officers, directors, employees, agents,
        predecessors, successors and assigns, both present and former (collectively,
        the
“Lender Affiliates”), the Borrower and its partners, subsidiaries, affiliates,
        parents, officers, directors, employees, agents, heirs, successors, assigns,
        and
        executors, (collectively, the “Obligor Parties”), agree that any recourse an
        Obligor Party may have against the Lender or the Lender Affiliates will be
        limited to the Fund for any action and actions, cause and causes of action,
        suits, debts, controversies, damages, judgments, executions, claims and demands
        whatsoever asserted or unasserted, in contract, tort, law or in equity which
        the
        Obligor Parties may have upon or against the Lender or the Lender Affiliates
        by
        reason of any matter, cause, causes or thing whatsoever including, without
        limitation, to any claim that relates to, in whole or in part, directly or
        indirectly (a) the making or administration of the Loan, including, without
        limitation, such claims and defenses based on mistake, usury, misrepresentation,
        or negligence; (b) any covenants, agreements, duties, or obligations set
        forth
        in the Loan Documents; (c) the actions or omissions of any of the Lender
        and/or
        the Lender Affiliates in connection with the initiation or continuing exercise
        of any right or remedy contained in the Loan Documents or at law or in equity;
        (d) lost profits; (e) loss of business opportunity; (f) increased financing
        costs; (g) increased legal or administrative fees; or (h) damages to business
        reputation, but excluding in each of the foregoing cases the gross negligence
        and willful misconduct of the Lender and/or the Lender Affiliates.

       

      
        
           

        

        
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      10.0. Replacement
        Documents.
        Upon
        receipt of an affidavit of an officer of Lender as to the loss, theft,
        destruction or mutilation of the Note or any other security document(s),
        together with an agreement reasonably satisfactory to the Borrower to indemnify
        the Borrower from any loss incurred by it in connection therewith, and, in
        the
        case of any such loss, theft, destruction or mutilation, upon surrender and
        cancellation of such Note or other document(s), Borrower will issue, in lieu
        thereof, a replacement Note or other document(s) in the same principal amount
        thereof and otherwise of like tenor.

       

      11.0. Consent
        To Jurisdiction.
        Borrower hereby agrees that any state or local court of the Commonwealth
        of
        Massachusetts or any United States District Court for the District of
        Massachusetts or, at the option of Lender, any court within the Commonwealth
        of
        Massachusetts in which Lender shall initiate legal or equitable proceedings
        and
        which has subject matter jurisdiction over the matter in controversy, shall
        have
        exclusive jurisdiction to hear and determine any claims or disputes between
        Borrower and Lender pertaining directly or indirectly to this Note or to
        any
        matter arising in connection with this Note. 

      


      12.0 Waivers.
        Borrower agrees that no delay or failure on the part of the holder in exercising
        any power, privilege, remedy, option or right hereunder shall operate as
        a
        waiver thereof or of any other power, privilege, remedy or right; nor shall
        any
        single or partial exercise of any power, privilege, remedy, option or right
        hereunder preclude any other or future exercise thereof or the exercise of
        any
        other power, privilege, remedy, option or right. The rights and remedies
        expressed herein are cumulative, and may be enforced successively, alternately,
        or concurrently and are not exclusive of any rights or remedies which holder
        may
        or would otherwise have under the provisions of all applicable laws, and
        under
        the provisions of all agreements between Borrower and Lender.

      


      Borrower
        hereby waives presentment, demand, notice, protest and all other demands
        and
        notices in connection with the delivery, acceptance, performance, default
        or
        enforcement of this Note. Borrower hereby assents to any extension or
        postponement of the time of payment or any other indulgence, to the addition
        or
        release of any party or person primarily or secondarily liable, and to the
        addition, release and/or substitution of all or any portion of any collateral
        now or hereafter securing this Note.

      


      BORROWER
        AND LENDER MUTUALLY HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
        THE
        RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED HEREON, ARISING OUT
        OF,
        UNDER OR IN CONNECTION WITH THIS NOTE OR ANY OTHER DOCUMENTS CONTEMPLATED
        TO BE
        EXECUTED IN CONNECTION HEREWITH OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
        STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF ANY PARTY. THIS WAIVER
        CONSTITUTES A MATERIAL INDUCEMENT FOR LENDER TO MAKE THE LOAN AND ACCEPT
        THIS
        NOTE.

      


      [SIGNATURES
        ON FOLLOWING PAGE]


      
        
           

        

        
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      This
        Note
        is executed as a sealed instrument and shall be governed by and construed
        in
        accordance with the laws of the Commonwealth of Massachusetts.

       

      
        
          
            	
                    WITNESS:

                  	
                    BORROWER:

                  
	 	 	 	 	 
	 	 	
                    BEACON
                      POWER CORPORATION

                  
	 	 	 	 	 
	 	 	 	 	 
	
                    /s/
                      Lynn Hall 

                  	 	
                    By:
                      

                  	
                    /s/
                      James M. Spiezio

                  	 
	 	 	 	
                    Name:
                      James M. Spiezio

                  
	 	 	 	
                    Title:
                      Chief Financial Officer

                  
	 	 	 	
                    Hereunto
                      Duly Authorized

                  


          

        

      

       

      
        
           

        

        
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